When we say:

  • activity statement – a form that businesses use to report and pay a number of tax obligations, including goods and services tax (GST), pay as you go (PAYG) instalments, PAYG withholding, and fringe benefits tax; labels G1 to G11 will be the most relevant to calculating the activity statement ratios
  • associated parties – people and entities closely associated with you, such as relatives, partners in a partnership, directors of companies or closely connected companies or trusts
  • benchmark – small business benchmarks, consisting of ratios specific to business industries
  • business – businesses with a turnover up to $15 million
  • cost of sales – the cost of anything produced, manufactured, acquired or purchased, for either
    • manufacture
    • sale or exchange in deriving the gross proceeds
    • earnings of the business

For the purposes of calculating the benchmark, cost of sales excludes labour.

  • default assessment – an original or amended assessment of a taxpayer's income tax or GST obligations that we issue when:
    • insufficient or unreliable information has been reported on tax returns or activity statements
    • a taxpayer has not lodged a tax return or activity statement

      We will only issue a default assessment when you are not able to provide accurate records or evidence that allows us to verify your business’s reported income, or if you refuse to lodge your tax returns after a number of requests
  • GST-free sales – goods or services not subject to GST and sold without GST in their price, reported at label G3 on your activity statement
  • key benchmark ratio – the benchmark we use to determine income or turnover and to identify businesses that may not be reporting some or all of their income
  • labour – salary and wage payments, including contractor payments (amounts exclude GST); it does not include payments to associated parties – for example, labour provided by a business owner or business partner
  • non-capital purchases – the purchases reported at label G11 on your activity statement. Non-capital purchases include trading stock and normal running expenses, such as
    • stationery and repairs
    • equipment rentals
    • leases
  • total expenses – the total expenses reported on the tax return less payments to associated parties (amounts exclude GST)
  • total sales – the total sales reported on your activity statement (amounts include GST); this includes all
    • GST-free sales
    • input-taxed sales
    • taxable sales
  • turnover – total revenue you receive from providing goods or services each year, excluding GST.
    Last modified: 11 Feb 2016QC 22302